This
matter comes to the Court on Defendants' Motions to
Dismiss Plaintiff's Complaint from Robert R. Kaplan and
Robert R. Kaplan, Jr. (collectively “the
Kaplans”), Leo Kiely, Scott Musil, and Bill Fields
(collectively, the “Independent Directors”), and
HC Government Realty Trust, Inc. (“HC REIT”).
Dkts. 31, 32, 33. Plaintiff has filed oppositions in
response, Dkts. 42, 43, 44, to which Defendants have replied,
Dkts. 48, 49, 50. The Court took extensive argument from
counsel at a hearing on these matters on August 7, 2019. The
Court abstains on Count I under the Burford
doctrine, and grants the motions to dismiss on Counts II and
III without prejudice.

BACKGROUND

For
purposes of this order, the Court accepts as true the facts
alleged in the Complaint. Dkt. 1. In 2010, Edwin Stanton
formed a company, later called Holmwood Capital, LLC,
(“Holmwood Capital”) to invest in real estate.
Id. ¶¶ 19. Thereafter, Stanton reached out
to his attorney and friend, Mr. Kaplan Jr., to discuss the
company. Id. ¶ 20. It was agreed that Mr.
Kaplan Jr. and his father, Mr. Kaplan, both members of the
law firm Kaplan Voekler Cunningham & Frank, PLC
(“Law Firm”) would invest nominal funds and legal
services for the venture. Id. ¶¶ 20-22.

To seek
additional funding for the company, Kaplan introduced
Holmwood Capital to Dr. Kurlander, a surgeon and citizen of
New York. Dkt. 1 ¶ 1, 22. Dr. Kurlander also owns and
controls Plaintiff Baker-Hill, a New York limited liability
company. Id. ¶ 2. On May 25, 2012, Plaintiffs
provided mezzanine financing as a lender and, at the end of
2012, became equity investors in Holmwood Capital with 63%
ownership. Id. ¶¶ 22-23.

Over
the next several years, Holmwood Capital acquired seven
commercial properties. Id. ¶ 28. Meanwhile, the
Kaplans, Mr. Stanton (through his company, Stanton Holdings),
and Plaintiffs formed an independent management company
called Holmwood Capital Advisors, LLC (“HC
Advisors”), with each owning 25%. Id. ¶
29. The Kaplans continued to perform related legal work,
including the preparation of organizational documents for
Holmwood Capital and HC Advisors. Id. ¶¶
27, 30.

The
Kaplans “insisted” that to obtain additional
financing a new entity should be formed to take advantage of
“Regulation A, ” which allows for small business
entities to raise capital without the restrictions of
publicly listed companies. Id. ¶ 31. Dr.
Kurlander, Mr. Stanton, and the Kaplans and Law Firm thus
formed HC Holdings and HC REIT, which was initially held
about equally by each of the Kaplans, Mr. Stanton, and Dr.
Kurlander. Id. ¶ 32. HC REIT was the general
partner of the operating partnership, HC Holdings, with
Holmwood Portfolio Holdings, LLC and Holmwood Capital, LLC as
limited partners. Id. ¶ 33. HC REIT is a
Maryland corporation.

Though
Mr. Stanton and Plaintiffs had expressed concerns about
losing control, they ultimately agreed with the Kaplans for
HC REIT to have a board of directors with four independent
directors and Mr. Kaplan, Dr. Kurlander, and Mr. Stanton.
Id. ¶¶ 34-35. The Kaplans represented the
independent directors would respect the preexisting
management agreement between HC REIT and HC Advisors.
Id. ¶ 35. Mr. Stanton also served HC REIT as
the chief executive officer, Mr. Kaplan, Jr. as the
president, Mr. Kaplan as the secretary, and Dr. Kurlander as
the treasurer. Id.

HC
Advisors continued to search for funding and, through
BB&T Capital Markets, the Kaplans were introduced to the
Hale Partnership. Id. ¶ 39. The Kaplans
negotiated with the Hale Partnership, which culminated in the
Hale Package. Id. ¶ 39. Instead of bringing the
proposal to HC Advisors, the Kaplans presented the Hale
Package to the HC REIT Board in August 2018. Id.
¶ 40. Plaintiffs submitted an alternative capital
proposal, the “Baker Hill Package.” Id.
¶ 41. With one director having resigned, a deadlock
between the packages was reached. Id. ¶ 12.

To
proceed with his investment, the Hale Partnership agreed to
redeem the equity interests of the Plaintiffs and Mr.
Stanton, which in January 2019 was agreed upon subject to an
independent investment bank's fairness opinion of the
proposed redemption price. Id. ¶ 44. The
fairness opinion resulted in a lower repurchase price, and
Plaintiffs and Mr. Stanton declined to proceed with the deal.
Id. ¶¶ 46-47.

On
March 5, 2019, Elizabeth Watson, the former CFO of HC REIT,
sent to Mr. Kaplan, Jr. a memorandum that she had prepared.
Id. ¶ 50. That memorandum explained the
unfavorable terms of the Hale Package. Id. Though
Mr. Kaplan, Jr. did not forward the memorandum to the Board,
on March 11, 2019 Defendant Musil did. Id. ¶
50. The next day at 10:43 a.m., Mr. Kaplan provided notice of
a board meeting set for 11:15 a.m. the following day.
Id. ¶ 51. This was about thirty-two minutes
more than the minimum required by the organizational
documents. Id. Also on March 12, 2019, Mr. Kaplan
disseminated a 121-page agenda of the meeting which included
terms and conditions that constituted the Hale Package.
Id. ¶ 52-53.

All
directors, except Dr. Kurlander who is a medical doctor and
was performing surgery, attended the March 13 meeting.
Id. ¶ 55. Mr. Stanton requested a continuance,
which was denied. Id. ¶ 56. The HC REIT Board
then approved, by a four to one margin, the items for
consideration, which “paved the way for the Hale
Package and all that goes with it, ” with Mr. Stanton
being the only dissenter. Id. ¶ 57. This meant
mezzanine financing at an interest rate of 14%, additional
money invested in 10% Series B Cumulative Convertible
Preferred Stock, money invested as common stock, and the
potential for additional investments. Dkt. 1-3. The Series B
Preferred Stock was made on parity with the Series A
preferred stock with respect to dividends and other
distribution rights. Dkt. 1-4 at 2. Mr. Stanton and Dr.
Kurlander were removed as officers of HC REIT. Dkt. 1-5 at
28; Dkt. 1-7 at 2-3; Dkt. 1 ¶ 53(e) & (f). On March
14, 2019, Mr. Kaplan, Jr. notified Mr. Stanton that the
management contract between HC REIT and HC Advisors would not
be renewed, “which such nonrenewal shall take effect on
March 31, 2020.” Dkt. 1-7 at 2.

Plaintiffs
bring three counts against Defendants. In Count I, Plaintiffs
petition for dissolution of the HC REIT under § 3-414 of
the Maryland Code. Count II is for breach of fiduciary duty
against the Independent Directors and the Kaplans
(collectively the “Board Defendants”). Count III
seeks declaratory judgment.

LEGAL
STANDARD

To
survive a Rule 12(b)(6) motion to dismiss, a plaintiff must
plead sufficient facts to state a claim that is
“plausible on its face.” Ashcroft v.
Iqbal,556 U.S. 662, 678 (2009) (citation omitted). When
considering a Rule 12(b)(6) motion, the court accepts all
factual allegations of the complaint as true and construes
them in the light most favorable to the plaintiff.
Pielage v. McConnell, 516 F.3d 1282, 1284 (11th Cir.
2008) (citation omitted). Courts should limit their
“consideration to the well-pleaded factual allegations,
documents central to or referenced in the complaint, and
matters judicially noticed.” La Grasta v. First
Union Sec., Inc., 358 F.3d 840, 845 (11th Cir. 2004)
(citations omitted).

DISCUSSION

I.
Choice-of-Law

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A
federal court sitting in diversity must apply the
choice-of-law rules of the state in which it sits. Klaxon
Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487 (1941).
Under Florida&#39;s choice-of-law principles, the law of the
state of incorporation governs the liabilities of the
officers or directors of a corporation. International
Ins. Co. v. Johns, 874 F.2d 1447 (11th Cir. ...

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